The time to challenge. The time to create the new normal.
There is no doubt that the double hit of COVID-19 and the continuing low oil price have left our industry in crisis. What is also not in doubt is that collectively we have never had a greater opportunity for meaningful change.
The opportunity for the oil and gas industry is clear – to reshape the entire industry’s supply chain, an opportunity to change the way things have always been done, to work together and forge an alternative route ahead. An opportunity to deliver for the next generation, by supporting the energy transition and leaving a successful legacy for our regions in the longer term.
Many comparisons have already been made with other industries, and how they have embraced the opportunity for change, have challenged traditional ways things were done and transformed their industry through digitalisation and greater collaboration with the supply chain. Yet within the oil and gas industry the standard ‘Master and Servant’ model has stayed largely the same for generations.
While the oil and gas industry has unique challenges, now is the time to finally admit that we can’t be driven by our edge cases, the things that really do make us special, but must instead focus on the fundamentals that are relevant to all industries. The time to stop doing what we have always done, which is over provision and promote competition over collaboration.
We need to get to the point where collaboration is taken in its true meaning, in determining a cooperative approach to jointly improving the way we do things, to represent meaningful change.
We appreciate that this may not be easy. If it was, it would have happened before now. Change provides opportunity for everyone, but the unknowns and fears that come with it can be its biggest barrier and this must be overcome. There is also no time to accommodate the small, self-serving acts of transformation. We have a responsibility to make a pathway for our future and that future is bigger than any individual or organisation.
That’s why we believe the change needs to be driven by the leadership within our industry. The leadership level needs to be made aware of the opportunities on offer to benefit not only for their business, but also the wider industry. Too often a new way of working which can demonstrate real value to the operator is blocked due to internal legacy practices, inflexible process or outdated understanding. The industry leadership needs to test their teams, challenging them to prove their thinking, and to build a culture of inclusion and innovation. This will require confidence and focus to drive through meaningful change, and now is the time to act.
Reshaping the supply chain – the vision for logistics
The largest outlay across the oil and gas supply chain is where multiples are present; where each party operates their own vessels, their own bases, manages their own planning teams and their own complex invoicing systems. This has set a precedent of over provisioning across our industry for years and has embedded a ‘normal’ which must be challenged in order to allow our industry to survive.
Our vision is for something very different, where operators collaborate based on their geographical area of operation within hub clusters, where we combine bases, platform supply vessels and resources to deliver cargo and supplies to offshore locations. The industry may believe that this should just focus on vessel pooling, but it is much wider than that. Economies of scale can be reached through a broader asset sharing vision, and outsourcing of services, and with transparent visibility and auditable controls, we can together realise the financial savings and environmental benefits a new model will deliver.
This is something we have already put into action in the UKCS, with the introduction of the Central and Northern North Sea (CNNS) Pool three years ago. By planning ahead and consolidating cargo from multiple locations we use shared vessels to deliver the cargo in a logical, transparent manner, without any compromise in service or delivery levels.
The CNNS Pool is built on the experience and expertise we have gained from successfully running the same model in the Southern North Sea (SNS) for over 25 years. There the pool of nine operators is governed through three agreed frameworks - The Legal Agreement, The Operations Manual and The Commercial Model and continues to serve twice as many offshore installations with half the resources. Operators in the pool have greater flexibility through access to an increased number of sailings, and safety is enhanced through uniform practices.
The savings – both in financial and environmental terms – can be truly significant. To give some context, in addition to generating millions of pounds of savings for pool members, in the past three years the two pools (CNNS and SNS) have saved over 66,000 Tonnes of CO2 emissions between them. That’s the equivalent of 13,000 cars driven for one year, 149 million car miles, 7 million gallons of gasoline, 6 million gallons of diesel and 66 million pounds of coal.
The benefits to the industry are clear, but the logical question to ask is ‘What’s in it for Peterson?’ We must have an ulterior motive, right? No, but through our experience, built over more than 50 years, we know that Operators simply cutting the costs of services from the supply chain is not sustainable. We want instead to help drive meaningful change for the next generation, be that to maximise economic recovery or support the energy transition.
This is about generational thinking, to secure long term opportunities and leave a successful legacy to support our regions and for our children long after we retire, but unless we change the ‘this is the way we have always done it’ mentality, then those opportunities will sadly remain out of our reach.
Murdo MacIver, Chief Operating Officer, Peterson Energy Logistics